Analyzing a Lead Gen Website purchase (Digital Real Estate)??

[Andrew Sponsler]

For those who have gotten into the digital marketing game and purchased lead gen sites (where you buy a website that is generating leads for a particular niche/industry, and then you "rent" out the website by selling the leads to a business)...

How do you evaluate the purchase price of the website? What is your target "cap rate" essentially?

For example, say I come across someone selling a website that is generating $500 in lead sales per month. How do I evaluate what purchase price is a good deal for this type of investment?

It seems like a typical asking price might be $10k-15k, and that means a 40-60% annual return!! Cashflow is great but it's not backed by a real asset though, and doesn't have the same tax, debt paydown, or appreciation advantages that a similar property might yield.

I'm trying to compare it to small multifamily in my head because that's what I'm generally looking for. With that I'm usually trying to find something that cashflows $100-200/unit, with a purchase price of <$50,000/unit, and I'd like for the CoC to be 10-12% or above.

Any feedback from the group as I try to get my head around how to value these types of investments?